Family Issues

There is a new trend emerging nowadays regarding the choice of securing a loan. Payday loans are getting preferential treatment from consumers over bank overdraft programs. In the past, the latter was the popular loan program but not anymore when consumers started to realize that payday loans are more practical and economical than their bank’s overdraft fees.

A newspaper ran a report stating that several national banks is the United States have been encouraging their clients with low balances to overdraw their checking accounts. Why is this? Overdrawing on your checking account allows the bank to curtail credit laws and amass billions of dollars from new fees. Bankers have been heralding overdraft programs as great service to their clients because they also cover bounced checks. This article will show you how bad a deal the overdraft program is.

A typical credit, for example, charges on the average an annual interest of up to 20% while an overdraft program impose flat fees for every overdraft transaction. This translates to a yearly interest rate of more than 1,000%. Overdraft programs also require customers to bring their low balances to positive levels in only a matter of days unlike other credit means which allow clients to pay loans when it is most convenient. Add the fact that traditional credit lines have thousands of dollars as credit limits while an overdraft plan only have limits starting from %100 to %300. A bank will start bouncing checks again after the overdraft is spent.

The same newspaper report also claimed that the wild success of overdraft programs has made banks richer. This has been attested by several private consultancy firms and statistics from bank regulators of the government. A certain bank—one of the largest financial institution and the top promoter of overdraft programs—has already charged customers over $1 billion in overdraft fees within just one year!

Overdraft programs—which charge of up to $35—are actually high-interest loans that target the working class and automatically works with checks and debit cards unlike payday loans that only charge flat fees. Customers who applied for overdraft programs are often left in the dark until they get a notification from their banks stating their overdrawn savings and checking accounts.

Banks are certainly taking advantage of the dire situation of people’s finances these days. They know that most consumers are having a hard time lasting through the next payday. And banks are getting greedier when it has been reported that they have already raised the overdraft fees 24 percent higher. There’s also a new banking software program that automatically process first the largest checks and debits.

So the next time you consider a loan, avoid your bank’s overdraft program.

Tags: Credit Cards, Bankruptcy, Credit Repair, Credit Reports, Debt

Some people who have huge loans and pending debts just needed a little education on how finances are managed.  They may not really know the difference between a simple interest and a compounded interest.  They may not know the implications of taking a longer loan term.  But other people who are in over their heads with burdensome loans and mountainous debts may need more than informative education.  They may need to take a closer look at how they view money and their self-worth.  They may even need to consult a counselor.

Many people today are shackled with financial worries such as meeting the minimum payments on credit cards, rushing to deposit money in the bank due to an issued check that will be due the next day, and facing solemn-faced creditors of representatives of collection agency.  Yet, despite all these energy-draining consequences of not budgeting one’s money wisely, the same people keep using their credit cards to buy unnecessary items and keep taking out payday loans

Studies conducted about such spenders reveal that the use of credit cards does not imprint on the minds of the spenders that they were actually using money.  One psychological theory states that a person’s action is reinforced if the consequences are positive and that the action is terminated if the consequences are negative.  Based on this theory, psychologists hypothesized that the person’s action of using the credit card is associated only with the satisfied feelings of acquiring a new possession.  The use of the credit card is not associated with the disconcerting and foreboding feelings of receiving the credit card statement, since the statement arrives perhaps a couple of weeks later.  People who use cash to pay items are less willing to spend than people who use credit cards.

The same studies reveal that people who have the urge to spend impulsively have low self-esteem.  Buying unaffordable items temporarily compensates for their feelings of inadequacy and that these expensive items will symbolize their self-worth.  Unfortunately, even millions of dollars cannot afford self-esteem nor procure self-worth.  These are intangible things that reflection, inspiration, and meditation can help develop inside a person’s psyche.  A counselor may help, too, but only as much as the person will allow.

If a person continues to ignore why he keeps swiping his plastic card to buy things he won’t use again after a few days, then he will never control his spending nor get out of debt.  He will never solve his deeper psychological problems.  He will always struggle to pay monthly dues.  And he will always take out payday loans, a situation in which he uses his coming wage to pay off his yesterday’s expenses plus interest.

Tags: Credit Repair, Bankruptcy, budget, Money Lenders, Unpaid Debts

Entering into a loan means a person has the responsibility to pay it back. If the person has entered into a secured loan, the asset he or she has been entered as collateral, he would be in tight fix to pay that loan back.  On the other hand if a person has entered into a very quickie fix loan such as a payday loan, the long term effect of this loan can be very painful in the wallet. If a person enters into a payday loan the repercussions could be very bad because of the high interest rates every time he rolls over or extends the loan.

That’s why it would be great if the person could work up a budget. By being able to work up a budget one can save money even though it will be little amounts. Those little amounts that you would deposit periodically it could amount to something big. It could even be enough for an emergency or a long time vacation trip you would want.

Let’s face it even though we have managed to have a budget plan, there would be sometimes were we would like to quit. We’d be tempted when we occasionally see a nice “Power Ranger Costume” or a “Britney Spears Worst Hits Album” to trash out the budget plan and splurge on expenses. Here are some ways to motivate ourselves from not quitting on the budget plan we have. Do you think buying a Britney Spears pain in the ears album is worth it in the long run?

1.    Be specific with what you want and what you want to achieve. Have a concrete timeframe. I.e. being able to save X amount of money by this time to motivate you onto not wasting money on useless stuff. If you find yourself way behind your goal, cutting back on food may be a lousy thing to achieve your goal.
2.    Think about the obstacles and how are you able to overcome them. Also think about your inadequacies.
3.    Write a plan that will help you overcome your obstacle. Make a step by step list for each obstacle you have written. Be specific as to how you can overcome your obstacle. For instance you are addicted to collecting B-movies of Chuck Norris; I think you might decide to STOP IT!!!
4.    List the benefits of following the budget plan. Make a pros and cons list. By quitting your collection of Chuck Norris Movies, I’m pretty sure the benefits will outweigh it.
5.    Always ask yourself if your goal is worth it? If your goal is only so that you can finally go to the annual Chuck Norris party at Tajikistan. Budgeting may not be worth it. Try to change your goal to being able to get a new car.

If you really want to be motivated try to give yourself some self talk in a private place in the house.

Have you ever heard of the expression “you should always save for a rainy day?” That expression should always and realistically be followed because if you do not learn to save up money for an emergency situation, you will always experience rainy days. You’d probably be stressed up where to get the money for emergency purposes. Or maybe, if you keep spending more than your income you could end up bankrupt or on welfare. So it is important to save up money instead of spending it all up.

Here are some ways that you may be able to save up that emergency money you need when the Mc Hammer revival Tour starts.

To some people saving up to something will be a challenge. Instead of thinking that you would need to save up to something, just think that you will deposit a small amount of money periodically. For instance, if you had extra cash after your budget, you could put away $50 or more. By doing so, you are not pressuring yourself. It will be like a slow retirement fund thing. You’d be surprised that one day you would eventually have that $3,000 in your savings. When you finally have that big amount of money, you should still continue to deposit small amounts. You should also try to figure out a way to grow the money by entering into bonds, stocks, etc. However do not use a large sum of the money, because remember it is for emergency.

Another important thing to consider is that you should always pay yourself first. This is also the advice given in the book “Rich Dad Poor Dad.” In his book, the author said that he would want to pay something for himself first before setting aside money to pay for the bills. By his method of thinking, he will now have to work harder just to be able to do so. Instead of being a laid back kind of guy just happy enough to pay his bills. When a person pays him or herself first, the person could also develop savings.

A person should also learn where his money goes. We are sometimes too busy to even recognize where our money goes. I’m one of them. There are times that I’d be surprised where my money has vanished. If you have a great memory or a mind like a register, you would no longer need to record your expenses.  Since there are only few people who have great memories it is best if you take records of your transactions or even keep the receipts. It would also be useful when you have broken up with someone to show them how much the two of you have spent going out.

The last and most important thing is BUDGET! BUDGET! BUDGET!!!!

Tags: Budget, Spending, Family, Save Money, Money

We envy people who needn’t have to borrow money to buy what they want.  But for some of us who have debts, this seemed like an attainable situation in life.  Not necessarily.  Getting out of debt is possible but it needs discipline, persistence, and a little advice on how to save money.

Food is a basic need that we cannot do without.  But remember that though we cannot do without rice for the whole day, we can do without French fries for the whole month.  And so, one of the best things you can do to save money when buying food is to avoid eating out.  Take a lunch with you.  Instead of buying your lunch at work, prepare that lunch together with your breakfast and take it with you to your office.  Meals prepared at home are definitely cheaper than the meals bought at fast food stops and restaurants.  Whenever you feel the itch to get inside the restaurant, be practical and think: Do you really need to eat croissant and drink designer coffee?  If your conscience cannot convince the “child” in you to retreat, then better keep all the receipts and add all the expenses.  The amount you spend could have made a considerable dent to your present debt.

Avoid buying meats that have been pre-cut, such as chicken wings only.  The amount you pay for them is higher because you are also paying the supermarket’s labor in cutting the meat for you.  You can do the cutting yourself.  It is a skill that can be learned.  For example, in cutting chicken, cut at the joints so that you will have an easier time.  Or in wet markets, buy one whole chicken and charm your way to the vendor and request him or her to cut it for you without extra charge.

Try vegetarian dishes.  Meat is significantly more expensive than vegetables.  But veggies can offer the same delicious meal.  Vegetarian dishes are also reputed to be more nutritious and healthful.

Avoid shopping at stores that have higher-priced goods.  Compare the price of milk at one supermarket with that of another.  The difference could be in centavos only, but when added up, you may still save money enough for your fare.

Avoid buying brands.  For example, when choosing soy sauce, you study the price and the volume of each brand and not just pick up the one which is most popular.  A popular brand means that the manufacturer spent lots on money on advertising and so part of the price of that product goes to the various media and talent used.

And last but the not the least, think of this as a mantra:  “Don’t buy what you don’t need.”  Every psychology subject differentiated “wants” from “needs”.  Identify the things you need and go without the “wants”.

Tags: save money, budget, groceries, grocery shopping, family