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Want To Avoid Financial Mistakes? Stop Being Too Complacent

money trapWe all make financial mistakes. Despite the negative repercussions, we owe a lot to these mistakes. The wrong turns that we make allows us to appreciate every financial success. Our errors also bring the most significant lessons. Everyone who is considered financially successful have gone through their own set of mistakes. The key is how we choose to rise from the errors that we have made in the past.

While we should never belittle the role of these mistakes in our lives, that does not mean we should not do our best to avoid them. We always need to be careful when dealing with our finances. We should learn the signs that we are headed towards another error so we can correct our mistakes before everything is too late.

But what if we are blinded by something that keeps us from seeing these signs? And what if that thing that blinds us, is our own complacency?

Financial confidence is not really a bad thing. This is what we need to help us take the necessary risks that will improve our financial position. However, too much complacency brought about by financial confidence might be destructive after all.

Your confidence is affected by two factors in your life: your income and expenses. When you have a high income and low expenses, that is when your confidence spikes. According to an article published in Forbes.com, the financial confidence of a person follows a pattern that is tied to their age. The article discussed the report from LearnVest that detailed this pattern. Based on that study, people in their 20s reach the height of their confidence level. It sinks as they reach their 30s and bottoms during their 40s. From there, the confidence level rises.

Now this is an important piece of information because it will help you condition yourself as you reach certain ages. You see, the higher your confidence level, the more complacent you become. The more complacent you are, the more chances that you can commit certain financial mistakes.

Being complacent can lead you to commit 4 money mistakes

Complacency is not a bad state to be in. However, it can lead you to commit mistakes because this is the time when you usually let your guard down. When you are not vigilant, that is when you are not as careful as you should be. Every time you are not careful, you are more likely to make mistakes.

But what are the financial mistakes that you can commit when you are too complacent? We can identify 4 of them.

Acquiring too much debt.

When you are too complacent with your financial resources, the tendency is for you to borrow too much. This confidence leads you to feel like you are invincible and that you can borrow as much money as you can because you are confident that you can pay it off. Well here is the truth. Regardless of how much money you are earning, you have tread with debt carefully. It does not matter if you are earning a six-figure income. You should never use it as your basis to borrow more money. Live within or below your means. Do not make your future self pay for what you are enjoying today.

Failing to check your credit report.

One of the financial mistakes that you can commit because of complacency involves your credit report. When you are too complacent with your credit security, you do not feel the need to check your credit report. The danger in that is your inability to detect if you were a victim of identity theft. According to the data published by CreditDonkey.com, fraudsters are getting better at stealing identities. The number 1 complaint filed in the Consumer Sentinel Network Data Book of the FTC (Federal Trade Commission) was identity theft. The cases are clearly increasing so you need to stay vigilant to keep it from happening to you. While constantly checking your credit report will not keep the crime from happening to you, it will give you early detection. As soon as you spot an unauthorized transaction reported in your credit history, you need to alert the major credit bureaus and the credit or lending company involved. File a dispute against that record so they will investigate and help clear your name of that particular debt. If you fail to spot and dispute this in time, you might end up paying for a debt that you did not make.

Saving too late for retirement.

When you are too complacent that your current financial position will not change, your tendency is to skip preparing for your future. It is the same sentiment as when you acquire too much debt. You feel like you can always start saving in the future and you hold on to that thought. That complacency is dangerous because your finances could change in an instant. If you fail to save for retirement as early as possible, you could face a lot of financial difficulties when you retire. You should not let the strength of your current financial position distract you from the urgency of saving for retirement.

Choosing the wrong debt solution.

There are many options to get out of debt. Sometimes people opt for solutions that are too good to be true and fail to explore the other options that are more suited to their financial situation. You need to understand that there are debt relief options for different financial situations. Do not feel complacent after you have researched one debt solution. Read about the others before you decide what you will use to get yourself out of debt. Choosing the right option will efficiently get you out of debt and will even save you money in the long run.

Best practices to stay financially vigilant

While complacency is a great feeling to have, you should not dwell too much into it that you lose sight of what is happening around you. Enjoy it but stay vigilant – always. Things will not always stay as it is even when you think that you are having all the luck in the world. This vigilance will help you avoid financial mistakes that can affect your future.

Here are a couple of tips that you can do to be vigilant about your finances.

  • Create a plan for everything. Financial success begins with planning. Unfortunately, this is not something that everyone does. According to CNBC.com, 34% of Americans do not have any form of financial plans. 58% create plans, but they believe that it needs improvement. Do not make this mistake. Create realistic plans that will help secure your future. You have budget plans, spending plans, debt repayment plans, retirement plans and college education plans. Think about the plans that you need so you will never forget about your goals regardless of your current financial position.
  • Set up reminders. Another way that you can be vigilant is by setting up reminders. If there are payments to be made, financial milestones to be met – these should have reminders to ensure that you will not forget to meet them.
  • SImplify your financial transactions. Sometimes, we make financial mistakes because we complicate things too much. The truth is, you can simplify your financial transactions. For instance, if you have a lot of credit accounts, you can consolidate debt them so you will not be too confused. Sometimes, your confusion increases the chances of you making a mistake.
  • Keep yourself informed. Finally, you need to keep yourself informed about what is happening all the time. Have the initiative to learn something new that will improve your financial situation. When you keep yourself informed, you can act on things and grab opportunities as they happen.

The key to keep complacency from leading you to commit financial mistakes is to be observant and open minded. Here is a video that lists some of the scariest money mistakes that you need to avoid at all cost.

Best And Worst Case Scenario When Using Debt Consolidation Loans

consolidate debtUsing debt consolidation loans to get out of a difficult financial situation is a common practice. In fact, this seems to be the most logical way to get out of debt for someone who has no idea about the other debt relief options available. A consumer who has not heard of debt settlement, debt management, credit counseling and other debt solutions will most likely think of using a loan to get out of their other credit obligations.

Some people think that using a loan to solve your existing debts is just like digging a hole to fill another hole. While that analogy may be true, this type of debt solution is actually quite effective – at least, if you know how to use it properly.

Debt consolidation loans are typically used to combine credit accounts with a high interest rate (e.g. credit card debt) and those with a low interest rate (e.g. home loans).

This type of solution is actually ideal for those with multiple high interest rate debts because it can help lower the current interest rate. The perfect example is credit card debt. According to an infographic published on PressPage.com, the average credit card debt of American consumers is currently at $5,142. This is based on the data gathered by TransUnion for the first quarter of 2015. If the average interest rate of this type of debt is 11% to 15%, it would mean paying as much as $64 per month on interest. That is a total of $768 each year. You are paying your creditor that much amount – the longer you stay in debt.

With debt consolidation loans, you have the chance to lower your interest rate. What you will do is to look for a new loan that you can get with a lower interest rate. In some cases, people use their home as collateral so they can get a secure loan. Since the risk is lesser because of your collateral, the creditor or lender will give you a low interest rate on this new loan. You can use the funds from this new account to pay for your existing debts.

In most cases, debt consolidation loans have a longer payment term. It stretches your current balance so you have a lower monthly payment.

All of this will result to a lower interest rate, a possibly lower monthly contribution and a longer payment term. This will help make debt payments more manageable because you have more room in your budget – now that your monthly payment is lower.

What are the two possible outcomes when using a loan to consolidate debt

Although this debt solution sounds promising, you need to be very careful when you choose to use it for your debt relief option. According to an article published on Time.com, it is very important that you understand how this debt solution works. There are fees, rates and other financial implications that you may not be comfortable with. If you are using your home as collateral, you might not be prepared for the risk that you will be putting it through. Like all debt solutions, there are two ways that your debt relief efforts can go. If you are not strategic about your use of debt consolidation loans, you might do more damage on your personal finances.

Let us discuss the best and worst case scenarios that can happen to you when you choose to use debt consolidation loans.

Best case scenario: You get out of debt.

Obviously, the best case scenario is your debt freedom. If you do things the right way, you should be able to get yourself out of debt.

This scenario involves being approved for a low interest rate loan. That way, you can save money on the interest amount that you have to pay for the convenience that the loan will bring. To arrive at the best case scenario, you also have to search for a loan that will not involve a lot of fees. The loan should also allow you to make lump sum payments whenever you are able. It should not charge you with prepayment penalties. That way, you can get out of debt a lot faster without incurring additional charges.

Another way to get to this scenario is by having a good credit report. The only way you can get the best possible terms on this new loan is when you have a high credit score. Having collateral will allow you to get a low interest rate on their loan, it is true. But it is a good credit score that will really help you get the best terms for your debt consolidation loan.

Worst case scenario: You add more into your debt.

Now to the worst case scenario – it is obviously ending up with more debt than when you started. This will happen if you get a loan that has a high interest rate and you fail to pay it on time.

The high interest loan is only possible if you have a good credit score. But even that can be saved if you only learn how to pay off your loan on time. You see, when you put all your debts and combine them into one loan – there is great danger in that. Some people get a false sense of complacency. They feel like they have already gotten out of debt.

Well, debt consolidation loans will not pay off what you owe – at least, not yet. You just transferred your multiple loans into one basket. You still have to pay them off. Some people make the mistake of thinking they already got out of debt. It made them more inclined to get more debt.

That is how you can land in this worst case scenario – and end up with more debt to your name.

How to assure that consolidating debts will work in your favor

But since you know the best and worst case scenario, you know what you need to target. You need to know how you will land in the best case scenario – not the other way.

According to Investopedia.com, if you do debt consolidation loan correctly, it can really boost your financial situation. It can improve your credit score – at least, if you pay off the principal a lot faster.

To help you accomplish that, here are some things that you can do.

  • Keep yourself from feeling complacent. As mentioned, you still have to pay off your loan. You need to remember that you just transferred your balance. You still have to pay for every penny. There is no debt reduction in this type of debt solution.
  • Refrain from borrowing more money. We are not saying that you stay away from debt entirely. You need to take on credit in order to keep your credit score up. However, you need to learn how to borrow money wisely. That way, even if you take on more credit, you will not endanger your finances in any way.
  • Stick to your new payment plan. Lastly, you want to make sure that you will stick to your new payment plan. Forget about the old payment schedules of your multiple debts. Concentrate on this new one and try to pay it off diligently. That is the how you can be sure to get yourself out of debt.

Debt consolidation loans will effectively eliminate debt as long as you avoid the traps that can lead you to the worst case scenario. All it really takes is some self control, discipline and better financial habits.

Can You Pay Off Debt While Unemployed? One Couple Proved It Is Possible

pay off debt textDid you know that it is possible to pay off debt even if you are unemployed? If you think that sounds impossible, we assure you, it is not.

Of course, you need to be employed at some point but the thing is, you can keep on paying your credit obligations even if you are in between jobs. You do not have to compromise your payments – but you do need to make certain sacrifices every now and then.

It seems that debt will forever be a part of our society. According to an article published on NewYorkFed.org, the American household debt increased by $117 billion from the third quarter going to the last quarter of 2014. Most of the balances have gone up for a lot of credit types. For mortgage, the increase was $39 billion. For car loans, the increase was $21 billion. For credit card debts, the increase was $20 billion. The balance of student loans continue to increase as it passed the trillion mark.

If we cannot pay off debt, we could be one step away from another financial disaster. That is why we need to make this one of our priorities.

Some people choose to compromise their debt payments because they have a low income. Some of them stop paying their credit because of job loss. Some creditors or lenders will probably help you by allowing you to defer payments. However, not everyone will be allowed to postpone payments, like credit card companies. They will continue to collect from you even if you have given them proof that you are unemployed and thus unable to pay off debt. What can you do to keep your debt from ruining your already difficult financial life?

How a couple got out of debt even with limited financial resources

You can probably get tips from Jackie Beck and her husband when it comes to that. This couple allowed Wisebread.com to publish their experience – how they journeyed from a $147,000 debt to debt freedom.

Now their story begins with Jackie describing their debt situation. Their six-figure debt is a combination of mortgage, student loans, credit card debt, car loans and even a home improvement loan. When she and her husband realized that they no longer want to be in debt, specifically their credit card debt, they made a commitment to pay it off. And Jackie kept that promise even when she became unemployed.

It was noted in the article that in most of their repayment period, either one of Jackie or her husband usually did not have a steady income. The alternated being unemployed, recovering from surgery, paying for huge bills while paying off their debt. So how do you think they did it?

Here are 5 things that they did correctly.

They had a plan and prioritized certain debts.

Given that they had a lot of debts and limited finances, they knew they had to prioritize certain debts. What Jackie did is to apply for deferment so she will be allowed to postpone her payments. After getting approval, she then used her limited financial resources to pay off her credit cards. This was a good move because of all their debts, credit cards have the highest interest rate. Not only that, this debt does not have a prepayment penalty – which means you can pay it off in huge sums and you will not be charged for it. Once the credit card debt was complete, she was free to make huge contributions towards her student loans. It got her out of debt a lot faster.

They used their initial success as motivation.

When her husband saw how Jackie’s efforts paid off, he became motivated to pay of debt that he owed. He concentrated on getting rid of his car loans. You can see that an initial success in paying off debt can be used to fuel your motivation to complete the others.

They lived on practically nothing.

You may be wondering already, how did the couple afford all their payments despite one having no income? They lived a frugal life. Believe it or not, they can live on $1,000 a month. They spent only on the basic necessities. Even if they finished paying off one debt, they were not quick to use that freed amount for luxurious expenses. They used it to make bigger contributions towards their remaining debts.

They made a habit of saving instead of borrowing more money.

While they were in the midst of paying off their debt, the couple made another loan that will allow them to finance their home improvement projects. After getting it, the couple realized that they had become uncomfortable in taking on new debt. They worked so hard to pay off debt that they wanted it over and done with. So everytime they wanted something, like a vacation, they just saved up for it. This soon became a habit that will keep them debt free.

They rewarded themselves.

The last thing that the couple did that was right is to reward themselves. Some people, while they are in the midst of debt relief, fail to budget for entertainment expenses. This makes their journey towards debt freedom very depressing. It sucks out the motivation that they had when they started their debt solution. You should realize that being in debt does not have to be very depressing. Take time to reward yourself and budget the appropriate expenses accordingly. While the couple’s debt and small resources gave them limited options, they concentrated on what mattered most to them. For instance, Jackie wanted to go to Antarctica – and that is what they saved up for. If you feel that what will make you happy is expensive, then just save money before you indulge.

What happens after paying off all your debts

The truth is, it is not easy to pay off debt, especially when you are unemployed. But something that you work hard for will definitely give you a lot of lessons along the way. If you are able to achieve debt freedom, then the habits that you had to form to get where you are will undoubtedly stick to you. But apart from that, here are 3 important things that will happen after you pay off everything that you owe.

  • Freedom. When you do not have debt crippling your finances, you are actually free to pursue what you want. The Becks can actually afford not to have a 9-5 job because of two things: they do not have credit obligations and that can manage on a $1,000/month budget. It can be very liberating once you realize that you do not need a lot of money to survive. Apart from that, you will feel less stress – which is one of the best ways to live.
  • Empowerment. After going through all the hard work to pay off debt, you will feel like you can overcome just about anything. When Jackie paid off both her credit card and student loan debts, her husband felt that he could do the same. The confidence that you have will definitely take you to places and make you fearless in taking calculated risks in life.
  • Opportunities. Getting rid of debt is one way to open opportunities – or be free to accept them. For instance, the Becks no longer feel the need to be tied down by a regular day job. They can grab any opportunity because the need to earn a certain amount each month is gone. And since there is not more debt, all their cash can be used for going on vacations or even investing.

But while being debt free is great, you have to know that eliminating credit completely is not really necessary. You can use credit (e.g. credit cards) and not be in debt. For instance, you can use your credit card and pay for it in full when the billing comes. That will allow you to have a good credit record without putting your financial situation in danger.

There are also instances when debt is a necessary tool that will allow you to improve your personal finances. According to an article published on BBC.com, debt is sometimes used to help achieve a goal. This includes getting an education, your own home or even start your own business. If you know how to manage your debt correctly, then you do not have to worry about it.

Just make sure that you will not let your debt rule over your life. You should only take on as much debt as you can afford to pay off. Otherwise, you might end up living from paycheck to paycheck because your debt payments are eating up most of your income.

A lot of consumers who are buried in debt usually live from paycheck to paycheck. It is a brutal cycle that you need to get out of. If you find yourself in this position, you know that you need to stop living this way. Here is a video that discusses different tips that other consumers did to get out of this financial situation.

What You Need To Know Before Choosing Credit Counseling

couple discussing financesElon Musk’s SpaceX team just learned what NASA discovered years ago and that’s the task of sending rockets into space isn’t an easy one. In fact, sometimes it can be downright tough. It can also be tough to be heavily in debt. And don’t think that debt still isn’t a problem. There is nearly $1 trillion in consumer debt outstanding and close to 1 million personal bankruptcies every year. There are also a lot of people who can’t refinance their mortgages because either they have bad credit or they’re underwater – without enough equity in their homes.

Fortunately, there are some relatively simple answers to getting out of debt. One of the most popular of these is credit counseling. This is where you contact a credit counseling agency and are assigned a counselor who reviews your finances and helps you either develop a budget designed to get your bill paying back on track or what’s called a debt management plan (DMP) – depending on how serious are your financial problems.

How to know when you need credit counseling

There are some danger signs or red flags that will tell you that you might need credit counseling. The first of these is if you’re receiving calls from debt collectors. Of course, you should have probably sought out consumer credit counseling before you started receiving those calls. A second red flag is if you’re living from paycheck to paycheck. When you’re doing this it means that every cent you earn is spoken for and you’re on a slippery slope. Experience just a small financial slipup such as an unexpected auto repair or a medical emergency and you’ll fall way behind.

A third sign is that if you find you’re hiding financial information and bills from your spouse or partner. Maybe you have credit cards that he or she doesn’t even know about or you’re locking purchases in the trunk of your card because you don’t want your spouse to see you carrying them in the house. A fourth sign is that you’re using payday loans or cash advances because you’re trying to support a lifestyle you simply can’t afford. And finally, the fifth sign you need consumer credit counseling is if you don’t even know how much you’re in debt.

How to know who can be trusted

If you’ve seen many of these red flags in your life then credit counseling can definitely help. But how do you know whom you can trust? There are two credit counseling agency associations that can be trusted. They are the National Foundation for Credit Counseling (NFCC) and the Association of Independent Credit Counseling Agencies (AICCA). Both these organizations have local members that are required to follow the highest standards of credit counseling. This means this is where your search for help should begin.

Before you leap

Before you run off to one of these credit counseling agencies there are some things you need to know about credit counseling in general and how to avoid being ripped off. Here are the five most important of them.

It should cost nothing or very little

No legitimate credit-counseling agency would want you to pile up even more debt by charging you a big fee. The members of the NFCC and the AICCA (formerly known as Financial Counseling Association of America or FCAA) generally charge nothing or very little for their services. For example, if you call the toll-free number of one of these two organizations you will be connected to your nearest local agency where you will get free counseling over either the phone or in person. This can be helpful even if you are not in debt as these agencies can offer advice on saving, budgeting and organizing your finances. They will also counsel potential homebuyers and people looking for a reverse mortgage.

You may get help with a debt management plan

While credit counseling can’t do anything to reduce your debt there is some things it can do. For example a credit-counseling agency can make your debt easier to bear through negotiations with your creditors to reduce your interest rates and “re-age” your debt. It can also help you with a debt management plan (DMP). If you end up with one of these plans you will longer be required to pay your creditors. You’ll send one check a month to the credit-counseling agency instead and it will then distribute the funds to your creditors. If you sign off on a debt management plan you’ll be required to give up your credit cards and not take on any new debt until you complete your plan which typically takes five years.

It won’t affect your credit score

If you go to a credit-counseling agency for help with budgeting or to just get your finances organized so that you can better manage your money this will not show up on your credit report. On the other hand, if you enter into a debt management plan this may be reported to the credit bureaus. If so, it will at least show you are making an effort to repay your debts and it shouldn’t affect your credit score.

You could avoid bankruptcyman looking frustrated

If you feel that it’s inevitable you’ll have to file for bankruptcy a debt repayment plan could help you avoid this. If it won’t, most credit-counseling agencies will assist you with the bankruptcy process. For example, it will refer you to a competent attorney that will not make your debt problems worse. For that matter, recent revisions in the bankruptcy code require you to go through credit counseling from an approved agency before you can file.

Most are partially subsidized by major credit issuers

The credit card issuers support nonprofit credit counseling as they want to avoid the losses associated with bankruptcy as this enables them to recover at least some of the money owed them. So if you are told to stay away from a credit-counseling agency because, “its money comes from the credit card companies,” ignore this advice. Both you and your lenders want the same thing, which is to help you avoid bankruptcy and get back on your feet.

Consider the options

There are other options available in addition to consumer credit counseling. For example, if most of your debt is credit card debts you might be able to transfer all of your balances to a new card with a lower interest rate or better yet, a 0% interest balance transfer card. You would then have one payment in place of the multiple payments you’re currently making and it should be less than the sum of those payments. If you own your home and have some equity in it you could get a home equity loan or homeowner equity line of credit and use the proceeds to pay off your debts. This would consolidate them and, again, you should have a much lower monthly payment than the sum of the payments you’re currently making. Finally, there is debt settlement as available from companies such as National Debt Relief. This has become popular because it’s the only way to actually get debts reduced. In fact, a reputable debt settlement company should be able to get them cut in half and help you become debt free in just 24 to 48 months.

If you’d like some additional tips about choosing a credit-counseling agency be sure to watch this short video.

HARP Just Might Be The Best Gift Ever To American Families

happy familyThere is no question about the fact that our government often gets things wrong. Consider what’s going on with the Veterans Administration and its bungled attempts to build new medical centers for our veterans. Or think about the fact that our Office of Personnel Management allowed hackers to steal the personal information of more than 4.5 million government employees. Then there’s the ongoing flap over Common Core standards.

Fortunately, our government does get some things right and one of them is a little known program that could put anywhere from several hundred dollars to maybe $1000 a month in your pocket. It’s called the Home Affordable Refinance Plan or HARP.

How much would this program save you?

It’s impossible to say how much HARP would save you except that it has saved homeowners that have taken advantage of it an average of $275 a month. Since this is an average it’s clear that that many homeowners saved much more than this. Beyond this the answer to how much you would save will depend on a number of factors.

Before you start thinking what you would do with all the money you would save with a HARP refinance it’s important to determine if you’d be eligible.

Would you be eligible?

The first and most important eligibility requirement for a HARP loan is that your mortgage must be either owned or guaranteed by Freddie Mac or Fannie Mae. If you don’t know the answer to this question both Fannie Mae and Freddie Mac have toll-free telephone numbers you could call. Fannie Mae’s is 1-800-7FANNIE. To reach Freddie Mac call 1-800-FREDDIE. Both of these lines are open from 8:AM to 8:00 PM ET. Both of them also have web submission processes that make it easy to get this information. Just go to either of its websites, enter some information and you will see if either of these agencies owns or guaranteed your loan. However, this is not a guarantee that you will be eligible for a HARP refinance, as you must also meet the other eligibility requirements.

The second of these requirements is that your mortgage must have been sold to either Fannie Mae or Freddie Mac before May 31, 2009. You cannot have refinanced under HARP unless it was a Fannie Mae loan that was refinanced under HARP from March through May 2009. Your current loan-to-value (LTV) ratio must be more than 80%. In addition you must be current on your mortgage at the time that you apply to refinance and have had a good payment history in the past 12 months.

How it works

Assuming you are eligible given the requirements you’ve just read there are three steps to get started on a HARP refinance.

First, you need to gather your financial information. This would include your mortgage statements and information on a second mortgage if applicable. You will also need your income information, which could be your tax return from the previous year or your pay stubs.

The second step is to contact your mortgage company and ask if it’s an approved HARP lender.

It’s best to start with your current lender because it will already have your loan information on file. But you will need to ask it to provide you with whatever information you will need to verify your current income.

If it turns out that your mortgage lender is not a HARP lender you’ll need to find one. You can find lenders that have been approved by HARP by clicking on this link. Call one, tell it that you’d like to finance and would like to see if you would be eligible for a HARP loan.

If a lender says you don’t qualify for one of these loans be sure to ask why. If you still believe you should qualify, ask to speak to the bank’s HARP specialist or talk with a different lender. It won’t hurt to get another opinion.

Finally, you will need to go through the application, approval and closing process. If the lender determines that you qualify for a HARP loan it will guide you through this process.

If you have a second mortgage

You could still be eligible for a HARP refinance if you have a second lien or mortgage on your house. However, your junior lender (the company that has your second mortgage) must agree to remain a junior and you must be able to show that you can meet the payment terms of the new first mortgage.

stack of cashWhy you will save money with a HARP refinance

The answer to this question is simple. You will have a lower interest rate. If not why would you choose to refinance? For a HARP refinance to be attractive you would probably need to have a mortgage interest rate of 6% to 8%. Some lenders are offering fixed interest HARP loans at 2.7% to 3.3%. However, the only way to learn how much lower an interest rate you could get with a HARP loan is to contact your mortgage company or a potential lender, and fill out an application. If it’s not significantly less than your current interest rate don’t bother to refinance.

Do the math

While you could save money with a HARP loan it’s important to do the math. For example, if you have a $125,000 loan at 6.5% interest and got a HARP loan at 5.375% you would only save about $90 a month. And your closing costs would probably be around $3200, which means it would take you almost three years to recoup that $3200. As you can see from this example it would probably not pay to get a HARP loan unless you owed significantly more than $125,000 on your mortgage or could reduce your interest rate substantially.

If you’re underwater or upside down

If you’re underwater – meaning that you owe more on your home then it’s worth – or upside down there is HARP 2.0. It’s designed to help people like you refinance their mortgages. And it’s especially good for people that are unable to find help elsewhere. HARP 2.0 is like HARP but with two key differences. First it will allow you to refinance if you have mortgage insurance and second the new mortgage lender is relieved of the responsibility for anything that happened on your first loan. This is due to the fact that there was massive fraud on the underwriting of many mortgages. If this is what happened to you, the new lender is not responsible. This puts more lenders in position to help.

The eligibility requirements for HARP 2.0 are the same as for the original HARP (as listed above).

Finally, here’s a two-minute video, courtesy of National Debt Relief, with more details about HARP 2.0.

Best Practices After Debt Relief

debt relief signDebt relief is a necessary step towards debt freedom. Of course, that is easier said than done. Although you are earning a lot of money, you cannot just dump all of that towards your debt payments. You have a lot of expenses to think about too. This is why a lot of consumers take forever to finally get rid of their credit obligations.

Depending on the amount that they owe, it takes them years and even decades to say goodbye to debt. For some, being free from debt will never be a reality. Even before they can completely pay off what they owe, some consumers continue to borrow more money. Some do it by choice, while others are forced into it. Those who are forced into it wait for a miracle to help them achieve debt relief. But miracles, when it comes to finances, are hard to come by right?

Not for the 350,000 students that will be granted debt relief by the US Secretary of Education. According to the news published on Gizmodo.com, more than $3.5 billion worth of student loans will be forgiven by the government. It is believed that the borrowers of these loans were victims of fraud. They were forced into taking huge student loans by the online schools owned by Corinthian Colleges. This for-profit college closed and filed for bankruptcy – in the midst of fraud charges. The Education Department will forgive a lot of federal loans owed by these students because of their enrollment to the schools of this college company.

We cannot really say that it was divine intervention that caused the forgiveness of this debt but one thing’s for sure, a lot of students will be feeling debt relief because of this event. It is great that these students were kept from financial demise caused by a loan that would apparently – do them no good.

Not everyone is as lucky as they are but this loan forgiveness is not the end of everything. If you want the debt relief to last, you need to maintain it. You can think of it as achieving your ideal weight after dieting so hard. Your efforts will not stop as soon as you see your target weight in the scale. You need to maintain that by eating right and continuing healthy activities like exercising.

What to do after you have paid off your debts

After debt relief, things will not be a tough anymore. But that doesn’t mean no effort will be spent. You need to exercise self control and discipline to maintain the financial state that you are currently in. For those who benefitted from loan forgiveness, the chances of going back into debt might be more likely to happen. That is because they did not work hard for their debt freedom. Those who worked hard and painstakingly saved every penny just to get out of debt would be more motivated to stay out of debt.

If you really want to turn your financial life around, you may want to follow these important activities that will keep you debt free.

Build up your emergency fund.

First and foremost, you have to make sure that you have an emergency fund. This is the money that you will put aside so you have something to spend in times of emergencies. This is a great way to stay out of debt. Usually people end up in debt because they were forced to borrow money after an unexpected expense arose. If you want to stay out of debt, you need to be prepared for these incidents. Since you no longer have debt payments, you can use the money allocated for this to grow your emergency fund.

Set up other saving goals.

Once you have enough emergency fund, you may want to set up other goals that you can save up for. If you want to buy your own house, you can save up for it. The more money you can pay towards the down payment, the lower amount is needed for your home loan. If you want to replace your car for a more fuel-efficient one, it is better for you to save up for it instead of getting a car loan. We all know that cars depreciate as soon as you drive it from the dealer. That means you will be paying way higher than the value of the car – especially if you add to that the interest that will be added to your loan amount. There are other saving goals that you need to look into like retirement or the college fund of your children. According to Bankrate.com, American families are still finding it hard to save money for a new car, college or retirement. But with some discipline, you can remove yourself from this statistic and save up for the right goals that you want to have in your life.

Invest your money.

Another task that you can do after debt relief is to invest your money. The first two are tasks that you need to do so you can protect yourself from the uncertainties of the future. This task, investing, will help you grow your personal net worth. You can choose an amount that you are comfortable risking and invest it in stocks, bonds and mutual funds. These will help grow your money better than a regular savings account will. The interest rate of investments is bigger than that of savings accounts.

Reward yourself.

Once you have taken care of the first three, you can think about rewarding yourself for freeing yourself from debt. Allow yourself to feel that debt relief is the secret to a happier life by rewarding yourself. You can buy yourself something that you have been depriving yourself for so long. Of course, you need to make sure that the reward that you will buy yourself is reasonable. And that you will pay for the reward in cash. Do not splurge too much that you will put yourself in a dangerous financial situation again. Buying a luxury car may be too much of a reward. A vacation with the family should be a great prize for what you have achieved too.

Spend smartly.

Now that you have achieved debt relief, you need to maintain it so you will no longer be burdened with debt again – at least, not unless you really have to. That means you need to spend your money wisely from now on. Be careful with your decisions. If you think that a purchase is unnecessary, do not buy it even if you know that you can afford to pay for it in cash. There are better places to put your money in – like your savings account or investment.

How to use credit without falling into a financial crisis

Truth is, although it is very hard to get debt relief, you should not be afraid of debt. Believe it or not, there are good and bad debts. According to an article published on BusinessInsider.com, a debt is categorized as good or bad depending on how it affects your credit reputation and finances. In other words, any debt that you should take from now on should be something that will improve your financial life. If it puts money in your pocket, borrowing money makes sense.

Instead of being scared of debt, you need to learn how to manage it so it works in your favor. Here are some tips that you need to follow when borrowing money.

  • Borrow so you can put more money in your pocket. This simply means you need to choose the debt that you will borrow. Credit card debt is fine but you need to consider what you are using it for. If it will be used to buy a product that will help you function better at work, then you can go ahead and use it. Just try to pay it off in full when the bill comes so you do not have to pay interest on it. Spending on updating your knowledge and skills is also a great reason to be in debt. As long as it can help increase your ability to earn money.
  • Have a plan to pay it back. With any debt that you will borrow, make sure that you have a repayment plan in place. It does not have to be detailed but you need to know where you will get the money to pay it off. If you do not know where to get the payment for the debt you will take, then do not borrow the money.
  • Include the debt payment in your budget. As soon as you know the amount that you need to pay off on a monthly basis, include it in your budget. That way, you will never forget it. This will also allow you to consider how your income will deal with this additional expense. If this expense is beyond your income, you can immediately choose another expense that you can give up so you can afford your debt payments. One of the budgeting mistakes that you can commit is failing to include debt payments. You will be charged with late penalty fees if you fail to pay on time.
  • Limit new credit until you pay your current. Lastly, you need to limit any new debt until you have paid off your existing. Even if you know that the bank will approve your loan, do not borrow money. Leave some room in your budget for your savings. It is better to pay for purchases in cash rather than credit. You can really enjoy your purchases if you know that you have paid for it in full before using it.

“I’m Gonna Get Out of Debt Or Die Trying”

Has your financial situation gotten so bad that you actually feel this way? Struggling to pay off debt can take a serious toll not only on you emotionally but even physically. The stress caused by trying to cope with debt can cause heart disease, diabetes, asthma, headaches and more. It can even shorten your life.woman drowning in debt

So what can you do if you’re desperate to get out of debt?

For one thing you could declare bankruptcy. A chapter 7 bankruptcy, which is often called a liquidation bankruptcy, would get rid of all or most all of your unsecured debts such as credit card debts, personal lines of credit and medical debts. It typically takes about three months to get through bankruptcy after you’ve filed. If you hire an attorney to help you he or she will probably charge you somewhere around $500 to $1000. Be aware that it’s not as easy to qualify for a Chapter 7 bankruptcy as it was until just a few years owe. The rules were tightened when Congress passed The “Bankruptcy Abuse Prevention and Consumer Protection Act” in 2005. For example, you now must attend and complete a credit-counseling course that’s been approved by the US Trustee’s office, the purpose of which is to give you an idea as to whether you really need to file for bankruptcy. There is now also a means test that would be applied to see if your income and ability to pay would exclude you from filing a Chapter 7 bankruptcy and force you instead into a chapter 13 bankruptcy.

A fresh start but at a cost

Bankruptcy is something that’s guaranteed in the United States Constitution as a way to give people a fresh start. And it can do just this. But that fresh start comes at a high cost. For example, a bankruptcy will stay in your credit reports for 10 years. Many employers now routinely check the credit reports of prospective employees so a bankruptcy could keep you from getting a job.

Filing for bankruptcy will drop your credit score by as many as 200 to 250 points. This will make it very difficult for you to get new credit for two or even three years after the bankruptcy. When you are able to get new credit it will have a very high interest rate. Your insurance premiums will probably go up and you could have a hard time renting a house or an apartment as your prospective landlord is sure to review your credit report and your bankruptcy could be a real deal breaker.

Here, courtesy of National Debt Relief is a short video of an attorney with more information about a chapter 7 bankruptcy and what your life will belief once you file.

A better alternative

If you’d rather not have the stain of a bankruptcy in your credit reports for the next 10 years there is a better alternative. It’s called debt settlement. And it’s been used by literally thousands of people to achieve debt relief. Spoiler alert – debt settlement will also have an adverse affect on your credit score but it won’t be as severe as a bankruptcy.

Would you be a good candidate for debt settlement?Video thumbnail for youtube video How To Be A Smart Credit Card User

Unfortunately, debt settlement isn’t for everyone. To be a good candidate for debt settlement you must have a legitimate financial hardship which has caused you to fall behind on your bills or that will cause you to fall behind in the near future. You must owe at least $7500 in unsecured debt and unable see any way to pay it off in two or three years. And you must have money to send the debt settlement company each month to fund your program.

How debt settlement works

The idea behind debt settlement is pretty simple. You hire a company to get your debts paid off by offering your creditors lump sum payments but for less than your balances. In fact, in most cases debt settlement companies are able to settle debts for roughly fifty cents on the dollar. If you owed, say, $20,000 this could mean your debts would be reduced to $10,000. Just think how much easier it would be to repay that amount of debt.

You pay the debt settlement company instead of your creditors

Once you sign an agreement with a debt settlement company you will no longer have to pay your creditors. In fact, you won’t have to have any interaction with them at all. What you’ll do instead is send a check once a month to the debt settlement company. Once there is a sufficient amount of money in your account the debt settlement company will begin negotiations with your lenders.

Debt settlement will eliminate most or all your debts

As we mentioned in an earlier paragraph to be a good candidate for debt settlement you must have a lot of unsecured debt such as medical debts, credit card debts and personal lines of credit. The reason for this is that secured debts such as automobile loans and mortgages cannot be settled. There are also some types of unsecured debts that can’t be settled including spousal support, child support, alimony, tax debts and student loan debts. You can’t get these types of debts discharged in a chapter 7 bankruptcy either.

The negatives of debt settlement

While debt settlement represents an excellent way to get relief from your debts it does come at a cost. Debts that have been settled are never reported to the credit bureaus as “paid in full.” They will be reported as “settled,” “settlement” or some similar verbiage. This will drop your credit report by maybe as many as 80 points – or far fewer than if you were to file for bankruptcy. Of course, if you’ve missed payments on your credit cards or other debts your credit score is already in the tank so an 80 point hit might not make that much of a difference.

The cost of debt settlement

As a very wise man once said, “there is no such thing as a free lunch.” And there is no such thing as free debt settlement – unless you do it yourself. Debt settlement companies are a business no different from an automobile dealer or an accounting firm. What the debt settlement company will cost you will depend largely on the size of your debt. Some settlement firms will take a percentage of the amount of money that they are able to save you but the better ones charge a flat fee. This fee will range from 15% to 25%. Most experts consider this to be a better option because it allows you to know going in exactly what the debt settlement company’s charges will be. Ethical debt settlement companies prorate their fees and will incorporate them into your monthly payments. However, they won’t actually take the money until all of your debts have been settled. This means that the good debt settlement companies such as National Debt Relief cost you nothing until they have settled all of your debts. Most also offer 100% satisfaction guarantees so that if you were to become dissatisfied with your program for any reason you could drop out, get all of your money back and end up not paying a single dime.

9 Ways To Earn Extra Money to Pay Down Debt You’ve Never Thought Of

College student catching money in the airWhen you think about earning extra money to pay down debt, what do you think of? Most people would think about things such as having a garage sale, selling stuff on eBay or horror of horrors, getting a second job. The problem with options like garage or estate sales or selling stuff on eBay is that you probably have a limited number of items available to sell. So what would you do when you run out of that stuff?

Getting a second job is one of the best ways to earn extra money to pay down debt but it just doesn’t work for everyone. We live pretty much in a 24/7 world now and the hours you’re working at your primary job just might preclude you from getting a second gig. For example, we know of tech support people that work shifts like 10 AM to 6 PM or even 10 PM to 6 AM. It’s just not possible for people like that to take on second jobs. Even if you have a traditional 8 AM to 5 PM job you might find that there are many days of the week when the job just doesn’t end at 5 PM.

So if you fall into one of these categories what could do to earn extra money?

#1. Put your car to work

If you own your car you could put it to work earning money for you. In today’s sharing economy there are numerous people looking to rent other people’s cars instead of purchasing their own. There are sites such as RelayRides and GetAround where you could connect with people that might be interested in renting your car by the day or even a week. If you’re not in a position where you could rent your car you could pick up extra money through Lyft or Uber where it’s possible to earn up to $35 an hour by taxiing people around. Plus, you get to set your own hours.

#2. Do mystery shopping

Here’s another part-time gig you could do where you get to choose your own hours. If you’re not familiar with mystery shopping it’s where you go into restaurants, stores and other places of business and then report on your experiences to help the companies determine how well they’re doing in customer service. You not only make your own schedule as a mystery shopper but you could take on as many or as few assignments as you chose. Some people who do mystery shopping take just a few assignments a week and make maybe $100. If you were to treat mystery shopping more like a full-time job you could earn up to $500 a week.

#3. Become an eBay drop shipper

If you don’t have stuff of your own to sell on eBay you could become a drop shipper or middleman. This can be a great gig because you don’t even have to ship stuff yourself. You find companies that are willing to use drop shippers and then list their products on eBay along with some good sales copy. When you make a sale, you notify the company that has the product and it ships it to your buyer for you. There is an online wholesale directory called SaleHoo that has listings for more than 8000 prescreened suppliers including companies like Playskool and Gap. Sign up for some of these companies and you would then become a storefront selling their products. The money you earn would be the difference between their wholesale prices and what ever it is you sell the merchandise for.

#4. Do affiliate marketing

Many different companies including well-known ones such as Amazon and Starbucks are looking for new customers and are willing to pay to get them. The way affiliate marketing works is that you promote a company’s’ products or services using a unique URL. When a person uses that link to buy the company’s products, you get a commission. Sites such as Share a Sale and Rakuten Affiliate Network are affiliate consolidators where you can find many different companies willing to pay you a commission to help sell their products or services. If you’d like to know more about affiliate marketing, go to the website Affilorama where you’ll find training information that could help you be successful.

#5. Become a direct seller

Thousands of people make extra money by direct selling for companies such as Avon and Mary Kay. Direct selling has earned a sort of poor reputation but does offer the opportunity to make an enviable amount of money while still working a full-time job. Direct selling isn’t just about cosmetics, either. You could earn a nice extra piece of change selling wellness products like Advocare, pet products, Tupperware or accessories.

#6. Join focus groups

Companies that would like to improve their marketing and advertising periodically conduct focus groups consisting of potential customers to help them understand what’s working and what’s not working. If you have the time necessary to participate it’s a good way to earn extra money. There are many companies that are actually anxious to pay you for your insights as a consumer and in some cases they’ll even come to your home. One company recently held a focus group that lasted two hours and consisted of talking with just several people about snack foods and tasting some cookies. The person hosting this group earned $250. The website FindFocusGroups.com has listings of companies looking for people that would like to participate in focus groups. Alternately you might search Craigslist using keywords like “paid study,” “market research” or “surveys.”

#7. Become a consultant

Many small companies need help but can’t afford to work with one of the big, well-known consulting groups. Instead, they look for individuals like maybe you where they can get the same skills cheaper and on an ala Carte basis. For example, HourlyNerd connects well-educated professionals with small companies that need consulting help. If you have skills in areas such as marketing, social networking, search engine optimization or program management you could pick up a nice bit of change by consulting with companies that need these types of skills.

#8. Be an online jurist

There are trial attorneys that look for people to judge cases that haven’t gone to court yet. They use online jurors to help figure out what an average group of people might think about the merits of their cases or how they might respond to the attorney’s concepts or tactics. Companies such as Online Verdict enable attorneys to access regular people to serve as online jurors. If you meet the criteria to sit on one of these juries you would likely earn between $10 and $60 for your time.

#9. Rent out a room or your househouse with cash in it

If you have a spare room in your house why not rent it out using a site like Airbnb that connects travelers with people that are willing to rent out a room or an entire house. There are also sites such as the VRBO (Vacation Rentals by Owner) and HomeAway where you could rent your house to paying guests when you’re away from home. In the event you have a friend that would let you sleep on his or her couch you could rent your house for a period of time without even leaving town.

How To Cope With Huge Medical Bills

woman looking at a lot of billsGetting sick with a life altering disease is bad enough as it is but it can feel even worse when the bills start rolling in. We have a friend that had emergency intestinal surgery last year and his hospital bill was over $120,000. Fortunately he had insurance that covered the majority of this cost. What can you do if you’re staring at a huge stack of medical bills and they add up to much more than you can afford? Here are six things you could do that might help.

Negotiate

A good first step would be to pick up the phone, call the hospital or doctor and offer to pay a smaller amount that you could manage. You will need to make sure that you’re speaking with someone that has the authority to negotiate with you. The simple fact is that if you don’t get the right person you won’t get the right answer. Experts in this area say that the best time to call to negotiate is first thing in the morning and early in the process – or soon after you get the bill or bills. It’s important to remain civil and not lose your temper. For example you could say, “Gosh, I just lost my job and I can’t afford this $100,000 bill. What would you do if you were in my situation?”

The reason why it’s important to negotiate early on in the process is because you don’t want to wait until the doctor or hospital turns your bill over to a debt collection agency. These agencies generally get 50% of what you agree to pay. This would leave the healthcare provider getting only 50% of your debt. Why not offer your provider 50% of what you owe? It might agree because it would end up getting the same amount of money.

Request a repayment plan

A second option would be to work out a payment plan with the medical provider. This would likely have either very low or no interest. The important thing is to negotiate for what you can afford. If your provider asks for $100 a month but you could pay only $50, let the provider know. That way you would be able to maintain your payments. Most hospitals are willing to work with people because they would rather get the money a little at a time than not get any at all.

Hire a professional negotiator

There are professional companies such as CoPatient that will negotiate in your behalf in order to reduce your bills. These companies will also review your bills looking for errors. As an example of this CoPatient says that it has saved its customers an average of 40%. It charges clients a fee equal to 35% of the amount of money it saves them. In addition, these companies know the lingo and how to work the system. If you were to try this on your own you would probably need to have a completely different dictionary just to understand all the medical technology.
The Patient Advocate Foundation could be another source for help. And it doesn’t charge anything for its services. It reports that its customers that have had an average of $1800 in debt have been able to get this reduced by 20% to 30%.

Look for financial assistance

If the healthcare provider or hospital is a nonprofit, check to see if you might qualify for financial assistance. One of the directives of the Affordable Care Act is that non-profits need to have formal policies on the financial help that’s available. If it turns out that your eligible you could have all or a large part of your bill waived. Even if you aren’t technically eligible for this assistance you should apply if you can’t afford the debt because it never hurts to ask.

smiling family with cash at the backgroundTry crowdfunding

While crowdfunding could help, you might find it a little distasteful because what it really amounts to is begging. You could go to Kickstarter, GiveForward or another similar site and create a campaign where friends, family members and sympathetic strangers could donate money to help you pay your bills. For your crowdfunding campaign to be successful you need to show why you’re deserving and you will need to outline specific needs. Successful crowdfunding efforts also include:

  • Personalization, persistence and promotion
  • Keeping potential donors abreast of what’s happening with your campaign
  • Creating new reasons for people to give
  • Setting incremental deadlines designed to encourage people to donate

Do be aware that these sites do charge fees. For example, Kickstarter takes 5% of whatever amount of money you raise and also charges $.20 for each pledge plus 3%. The fee on Give Forward is 7.9%, plus $.50 for each transaction. This is to cover the costs of its online payment service provider and also to pay the company’s developers and coaches.

Plastic it

Maybe this seems obvious but you could always put those medical bills on a credit card to satisfy your debts. If you choose a card with cash back, points or airline miles you could get some nice rewards in the process. However, this is not the best first step. Once you put your medical debt on a credit card you will no longer have any negotiating power. Plus, it’s more than likely that you’ll end up paying more in interest. Medical debt on a payment plan is generally interest-free. If you switch that debt over to a credit card you’re turning interest-free debt into an interest-barring debt. This means it will end up costing you more.

Look for help from a charity

There are a number of charities focused on specific illnesses or conditions. This is true of Crohn’s disease, HIV, diabetes, breast cancer and many more. If your illness falls into one of these categories you should definitely contact the appropriate organization to see what financial help it might have available. In addition, there are government programs that could help. For example there are government programs that offer cash monthly for people that have disabilities and are having a problem making ends meet. The Social Security Administration offers a good deal of user-friendly information on the disability benefits it offers. It’s available at www.SSA.gov/dibplan. You might be eligible for this program if:

  • You are unable to do the work you did before you became disabled
  • The SSA determines that there is no other work you could do because of your medical condition(s)
  • The disability you are experiencing is expected to last for at least one year or result in death.

Simple Tricks For Cutting Costs And Fattening Up Your Piggy Bank

woman with a full grocery shopping bagWe’ve always find it ironic that when the government reports that the cost of living or Consumer Price Index has increased only +0.4% (Feb 2015) that this does not include the cost of gas or food. And while the cost of gas has dropped recently, the cost of food continues to increase every month. If yours is a typical family you’ve probably also seen increases in the cost of your cable or satellite service and your utilities. It’s tough these days to just stay even let alone save money. Fortunately there are some simple tricks that you could use to cut your everyday costs and fatten up your piggy bank.

Let’s work on that grocery bill

If you grow pale and faint when you see the total amount you’ve just spent on a week’s groceries, take heart. There are some simple things you could do to cut down the cost of your groceries. It begins with making a grocery list. The simple fact is that you should never go to the grocery store without a list. This accomplishes two things. First, it ensures that you’ll get everything you need, which will cut down on those trips you have to make to get the stuff you forgot. Second, having a grocery list will keep you from spending money on all those tempting things you see at those aisle-and displays.

Next, become an avid coupon clipper. You’ll find them in your newspaper – probably on Wednesday — as this is normally food day. If you don’t get a newspaper go online and sign up for your favorite supermarket’s newsletter. There are also tons of websites that offer coupons, many of which are printable. Some of the best include Shopathome.com, Thecrazycouponlady.com and, of course, Coupons.com. Always look for stores that offer double coupons on the stuff you need and for coupons that align with sales that are going on at your supermarket. And, finally, try to buy as many store brand items as you can, as this should save you up to 25% vs. brand name items.

Small changes can mean a lot

As an example of this the stuff that you drink can really add up. If you’re using bottled water, stop it. Those bottles are not only costing you money but they’re not good for the environment. Buy one of those bottles that filters water and then just fill it up with tap water. Believe it or not this can save you hundreds of dollars over the course of a year. Also, stop buying those lattes and brew your coffee at home. This alone could save you more than $700 a year. If you eat out a lot you can save big money by not doing it. Half of the average American’s budget goes to eating meals out of the home. If that’s typical of you just think how much you could do in cutting costs simply by eating at home instead of going to restaurants or getting takeout.

money and measuring tape

Slash your cable bill

Did you know that the average American spends $86 a month on cable or $1032 a year? If you have a digital TV you could buy an antenna for $30 or less which would get you all your local channels free. If your TV is analog all you would need to do is buy a cheap converter. We have a small antenna next to one of our digital TVs and we get more than 30 local channels. Not all of these are ones you would watch on a regular basis but we were surprised at what’s available and you might be, too.

If you do decide to ditch cable or satellite TV you could get movies through a subscription service such as Netflix or at one of those kiosks at your supermarket. You say you just can’t give up cable entirely? Then call your cable company and see if you couldn’t negotiate a better deal. Most of these companies will offer you a nice discount if you bundle, which means getting television, Internet and phone service all together. Or go online and check to see what packages your cable provider has available, as you might be able to save money by downgrading to fewer channels.

You can also save money by changing your movie going habits. Matinees and early shows always cost less than if you were to go to the same film at night. And the same holds true of restaurant meals. When there’s a hot new restaurant in town that you would like to sample, have lunch there instead of dinner.

Chop down that energy bill

If you’re like the average family you spend $1900 a year on energy. You could knock that down a few dollars simply by shutting off the lights in rooms you’re not using. If you don’t have a programmable thermostat you should certainly get one. It shouldn’t cost you more than $60 and will pay for itself in just a few months by automatically turning down the temperature during those times of the day that you’re not there. You might also do a home energy audit. The Environmental Protection Agency has a free calculator that would help you see where you could achieve some savings. It’s available at EnergyStar.gov.

For that matter, this short video show how you could actually cut your electric bill in half and just think how much that could save you …

Do you commute to work?

Another great way to save money if you commute to work is by getting into or forming a carpool or by taking public transportation. This would not only cut your gas costs but also the wear and tear on your car.

The big stuff

There are some changes you could make that would result in some really big savings. If you have a mortgage, think about refinancing your home. Last week we heard that one of our local mortgage brokers was offering fixed rate mortgages at less than 4%. If you have a mortgage at 5% or higher and you were to refinance you could put a couple hundred dollars a month in your pocket. If you rent try negotiating with your landlord for a cheaper rent when you next sign a lease or offer to sign a longer one in return for a discount.

Get creative

If you stop to think about it there are probably dozens of other ways you could cut your spending. Just get creative. And be sure to get your entire family involved. We know of families that have a meeting once a month where everyone contributes their ideas for saving money with a prize to the person that comes up with the best suggestion. Be sure to make a budget so that you can keep track of your spending, as you might be amazed at how little changes along the way have helped fatten up your piggy bank. And when it gets right down to it, what’s better than a fat, happy piggy bank?

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