Don’t let lower gas prices stop you from driving frugally
October 28, 2008
I’m sure we all breathed a collective sigh of relief over the past few weeks as gas prices stopped climbing and then slowly started falling.
The Associated Press wrote an article explaining why the shift in oil prices has occurred. If you’re interested, you can read the story here.
While gas was at $4 a gallon, and even higher in some places, we did a good job of cutting back. For the first time in several decades, our gas consumption dropped this summer. Sure it was only by 1 percent, but that’s actually a really big decline when you’re talking about Americans reducing how much they drive.
I think we all need to make an effort to continue our frugal driving habits and to reduce how much we drive. Prince told us to party like it’s 1999, and I’m saying we all need to drive like it’s 1979. (That’s the second time there was a gas shortage in the 70s when there was talk of rationing gas like the government did in 1973.)
It’s very easy for us to slip back into old habits. Even though gas as dropped in price, we’re still in the middle of economic turbulent times. It’s important for all of us to maintain frugal lifestyles and not slip back into bad habits.
Every dollar you can save in gasoline could be put to better use somewhere else in your budget.
What’s your credit grade? Checking your credit report and credit score
October 24, 2008
Based on my conversations with many people, it seems like there is some confusion when it comes to credit reports and credit scores. There is a difference between the two.
Remember when you were in school and you got progress reports and semester grades? Think of your credit report as a progress report and your credit score as your letter grade.
Your credit report is a detail of your credit history and how well you’ve managed credit. It shows who your creditors have been over the years, how much credit you have taken out and whether or not you’ve paid your creditors on time. Your credit report also reflects when you have opened new lines of credit and if any creditors have recently reviewed your credit report.
It is important to check your credit report on a regular basis to make sure there are no inaccuracies. You are entitled to a free copy of your credit report each year from each of the three credit reporting bureaus (Experian, Equifax and TransUnion). You can access a copy of your free credit report by visiting www.annualcreditreport.com.
Your credit report does not include your credit score.
Each of the credit reporting bureaus uses an algorithm to calculate your credit score. The score is based upon information in your credit report. It is common for your credit score to vary from credit bureau to credit bureau.
Credit scores can range from a low end of 300 to a high end of 850. The higher your credit score is the more likely you are to be approved for a loan and to get a better interest rate.
Unlike your credit report, you have to pay for your credit score. This typically costs about $15 per score from each credit reporting bureau.
It isn’t really necessary to pay for your credit score unless you are planning on taking out a long-term loan like a mortgage, car loan or large personal loan. If you are planning on taking out a large loan, it is helpful for you to know your credit score before you begin shopping for a lender.
If you find that your credit score is on the lower end, you may want to hold off on your purchase and try to improve your credit score. If not, you should be prepared for the possibility that your loan could be denied, or that you will pay a high interest rate.
The keys to increasing your credit score are to pay your bills on time, avoid opening new lines of credit and paying down your debts.
There are companies out there that promise they can erase negative information from your credit report. In general, negative items (such as a charge off or a bankruptcy) stay on your credit report for seven to 10 years. It is very important to remember that any negative information on your credit report that is valid and accurate is impossible to remove before the seven to 10 year time period. Beware of any companies that promise you otherwise.
Get professional advice before cutting back on prescription medications
October 22, 2008
The New York Times had an article this morning about people who are cutting back on their prescription medications in order to save money. You can read the whole article here.
Some of these people have decided to take their medication every other day instead of daily. Some people are cutting pills in half. Still others have stopped taking their prescriptions all together.
When money gets tight, health care is one of the first things that people let slide. They ignore that pain in their back or put off getting new eye glasses. People assume that can wait.
I have two suggestions for anyone is a financial crunch who is considering altering the way they take their prescription medications.
The first suggestion is to get financial advice. Schedule a free credit counseling session and let a certified credit counselor look at your budget and help you determine if there is any way to free up some money to put towards your medication. At the very least, you will walk away from the session with some good advice and a plan for the future.
The second suggestion is to talk to your doctor. If you determine that there is absolutely no way to pay for all of your medications, don’t decide what to cut out or how to cut back without professional advice. Be honest with your doctor about your financial situation and ask if he or she can help you figure out how or what to adjust. Maybe there is a generic form of the drug you can take. Maybe some medications would be less detrimental to take every other day than others. Don’t play doctor to yourself.
You don’t want to end up in a situation where you cut back on a medication and end up with a more serious medical problem. Your health should be your number one priority.
Women need to take control of their finances
October 20, 2008
It’s time for women to buckle down and save up for retirement.
Recent studies show that women are very unprepared for retirement.
According to the Ninth Annual Transamerican Retirement Survey, single women estimate they need a median amount of $500,000 by the time they retire. Despite their estimates, one third of women reported they have saved less than $25,000 and only one in 10 women reported having saved more than $100,000.
What’s even more disturbing, the majority of these women arrived at these numbers based on a guesstimate and not actual calculations.
It is a fact that women outlive men. The prospects of having Social Security to fall back on are rapidly diminishing, especially for younger workers.
If you haven’t started to save for retirement, you should meet with a financial planner in your area and talk about what you can do to start building a nest egg.
If you’re concerned that you don’t have enough leftover income every month to set aside money for retirement, contact the certified counselors at Advantage CCS. They can go over your budget and help you to look for ways to scale back on your expenses so that you can pay down any debt you may have and possibly free up some money to put towards retirement savings.
Don’t let the turbulence in the Stock Market discourage you from saving money. If you’re nervous about investing, you can ask your financial planner to guide you towards low risk options.
Avoid payday loans
October 15, 2008
It’s Wednesday. You have over a week until your next payday. You have a pile of bills due. Your kids need lunch money. You owe your friend $20.
A feeling of panic washes over you. You begin juggling numbers and adding and subtracting in your head.
You’re not going to make it.
Then you remember that place down the street that will cash your check today. You just have to repay them when you get your paycheck next week.
It seems like a financial life saver being thrown to you.
Reality: Payday loans are not a financial lifesaver. In fact, they’re more likely to be the equivalent of throwing a drowning man a brick.
There are a couple of reasons why payday loans are most likely not going to help you.
The first reason is that if the scenario above sounds familiar — and it’s a scenario you face often — the chances are good that you won’t actually be able to afford to repay the loan out of your next paycheck.
That leads to the second reason, which is incredibly high fees and interest rates. Payday loans can carry Annual Percentage Rates (APR’s) of higher than 300 percent. Yes, 300 percent!!
You could end up repaying almost twice the amount you borrow. And these days no one can afford to borrow $100 and pay back $180.
I conducted an informal poll of our counselors here at Advantage CCS. They’ve seen a fair number of people who are having financial difficulties and have also taken out payday loans. Not one counselor could remember one case where a payday loan actually helped the person. All the payday loans did was create an additional burden.
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If you are in need of a loan, it would be much less damaging to check with your local bank or credit union where you may be able to get a loan at a much lower interest rate with a longer payback term. The Pennsylvania Treasure and the Pennsylvania Credit Union Association have established something called the “Better Choice Program” to help steer consumers towards financial help that is more consumer friendly from reputable lenders. You can find information about the Better Choice Program at www.ibelong.org.
If you need help budgeting and managing your debt, you can contact the certified counselors at Advantage CCS and, for no cost, they will guide you through a comprehensive credit counseling session.
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